Bernie Arnason

At an industry analyst meeting held recently in Dallas (TX), an AT&T strategy of disruption of its own business was a key theme throughout. “We are setting out to disrupt ourselves,” said AT&T vice chairman Ralph de la Vega. That disruptive tone highlights an AT&T strategy of leveraging its vast network assets and global scale to enable and monetize emerging business models.

Some of the more promising lines of business AT&T hopes to disrupt themselves with include Internet of Things, network virtualization, entertainment/over-the-top, and network security among others. This disruption strategy is no trivial task, considering AT&T also has a vast ‘legacy’ culture to contend with, which offers a deep portfolio of legacy products that still generate a lot of revenue and profits. From a C-level executive standpoint though, AT&T does appear to have significant focus and understands that disruption of the traditional telecom and broadband business is already well underway. They aim to steer the technology conglomerate in the right ‘disruptive’ direction. In this Telecompetitor series, I’ll offer insight into this evolving AT&T strategy, gained from this recent AT&T analyst event. Part I focuses on entertainment and OTT.

There is an official Google wireless Internet service provider today, thanks to the closing of the Webpass acquisition by Google. Webpass has ‘tens of thousands’ of wireless customers, primarily business, in five markets across the US. They use a point-to-point wireless technology, offering access of up to a gigabit in speed. They currently have 800 buildings on-net.

For now, Webpass will continue to operate as usual, as a Google Fiber subsidiary company. Over time, Google Fiber intends to integrate Webpass’ wireless solutions into a hybrid fiber-wireless approach for gigabit broadband delivery. “Of course, at Google Fiber we’re particularly excited about Webpass’ application of point-to-point wireless deployment methodology,” said Dennis Kish, president of Google Fiber. “As we’ve said, our strategy going forward will be a hybrid approach with wireless playing an integral part.”

Broadband carriers spend a lot of effort emphasizing broadband speed tiers with their marketing efforts. There is a never ending speed race, with carriers trying to outdo each other with their broadband speed tiers. Is there a better approach? One that focuses on experience versus speed and bills subscribers based on usage, not speed? This was an interesting approach discussed on the Usage Based Billing Strategy panel at NTCA’s Fall Conference.

Instead of emphasizing speed, why not emphasize a better broadband experience that delivers all the applications customers want, and base their monthly billing on their amount of broadband usage. It’s a bit of a paradigm shift that’s broader than just about shifting to a usage based billing strategy. Most current usage based billing programs still emphasize and lead with speed when marketing the service. Metered broadband or usage caps are an afterthought, oftentimes based on the speed tier selected. In this new approach, the thought is, don’t lead with speed at all. In fact, maybe offer all customers the most speed you can offer, without even emphasizing it.

If you follow the broadband industry closely, you have probably seen a pay-TV forecast or two that suggests pay-TV’s brightest days are in the past. Cord cutting and over-the-top (OTT) alternatives are now ‘in vogue’ and some say the future of pay-TV is in jeopardy as a result. At least the pay-TV model that we are all used to.

In the midst of this debate, small independent video providers have additional challenges, including rising costs, growing regulatory obligations, and slimmer margins. It would be easy to think the future doesn’t look at all promising. But is it really that bad? Perhaps not, depending on the angle at which you look at the problem. That’s a key take away for me from this week’s NCTC/ACA Independent Show, taking place in Orlando (FL). There was a real vibe at the show among the organizations’ small independent cable/IPTV members that, while challenging, the future can be bright. It’s just a matter of recognizing the business environment and adjusting accordingly.

It’s no secret that teenagers love their smartphones, but it’s worth noting that smartphone penetration among children continues to surge. According to an eMarketer report, 88.3% of teens aged 12 to 17 will have mobile phones this year, and among that population, 84% will have smartphones. But the trend is moving downward (in age speak), with smartphone penetration among children surging as well.

According to the report, roughly 50% of children aged 0 – 11 will have a smartphone by 2020, up from 41% in 2016. The age group with the current highest smartphone penetration of 95.2% is adults aged 25 – 34, followed closely by adults aged 18 – 24 at 94.9%. By 2020, the 18-24 age group will surpass all other categories, with 99% penetration. Smartphone penetration among children is currently at 41%, followed closely by adults aged over 65 at 44%. Interestingly enough, smartphone penetration among seniors aged 65 and higher will grow faster than children (and any other age group), reaching 55.4% by 2020, a growth rate of 25%.

AT&T announced that current Austin, Texas based subscribers to their 300 Mbps GigaPower Internet service will soon see upgrades that deliver 1 Gbps, fulfilling GigaPower’s initial launch promise.

Existing customers will not need to do anything to receive the 1 Gbps upgrade.

AT&T reacted quickly to Google’s announcement to bring Google Fiber to Austin, issuing a press release about an hour after Google’s Austin expansion announcement.

AT&T reports that tens of thousands of Austin residents have access to GigaPower, but they have not revealed many details regarding the availability and penetration of the service. Regardless, it does appear as if AT&T will have a first mover advantage in Austin with Gigabit services.

The recent Aereo Supreme Court case, while not exactly positive for Aereo, may help drive cloud DVR adoption, according to Parks Associates’ Research Analyst Glenn Hower.

And with growing interest in the application, video service providers “…can experiment with these cloud services as strategies to build subscriber loyalty and increase revenues.”

Recent Parks’ research reveals that 45% of US pay-TV subscribers find cloud DVR technology very appealing. Subscribers have particular interest in unlimited storage space and two-week catch-up services for video, according to the research findings.

With so many gigabit announcements, it almost feels like a ‘land grab,’ particularly with AT&T.

In a matter of months, AT&T is positioning itself as a major fiber-to-the-home (FTTH) gigabit broadband provider, at least in the context of the number of press releases they have issued. Time will tell whether those press releases actually translate into large numbers of AT&T FTTH subscribers.

The research and development arm of Alcatel-Lucent, Bell Labs, announced a new speed record for the transmission of data over copper lines of 10 Gbps (10,000 Mbps).

The experiment was in a lab setting, using prototype technology called XG-FAST, which is a prototype extension of G.Fast, the next generation copper broadband technology.

G.Fast is being finalized as an ITU standard, and should start becoming commercially available sometime in 2015. The 10 Gbps over copper experiment used two bonded copper pairs with an expanded frequency range of 500 MHz. The transmission was over a very short distance of 30 meters (approx 100 feet).

[Commentary] Netflix appears to be positioning itself as a major voice against the Comcast-Time Warner Cable merger.

Sen Al Franken (D-MN) has indicated he intends to invite Netflix’s participation in the regulatory approval debate and Netflix confirmed they intend to take him up on his offer. Needless to say, Comcast isn’t pleased.